First, the inauguration of pro-market president Xi Jinping marks a shift away from the conservation-oriented, government-planned approach of his predecessor toward a model marked by increased privatization, including tax cuts for private enterprises, relaxed political controls, programs to boost domestic consumption and intensified resource exploitation. Xi insists that low-carbon growth will remain a priority and that the ambitious energy-saving targets of the twelfth Five Year Plan, issued in March 2011, will be met. But the targets were written in such a way that many of the details for implementation are open to interpretation. While the government had previously signaled that it would rely on growth in wind and solar to meet its goal (11.4 percent of total energy from renewable sources by 2015), it now looks like the bulk of that will come from nuclear and hydroelectric. Wind and solar are growing, but as a proportion of China’s total energy expenditure, coal is growing much faster.

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Second, shifts in US energy consumption patterns, as well as changes in estimates of global oil reserves, will affect China’s long-term energy strategy. The International Energy Agency reports that discoveries of shale gas combined with new drilling technologies will make the United States the world’s largest oil producer by 2020. This is expected to make oil reserves in the Middle East and Central Asia newly available to China—which could reverse the shortage-driven incentive structure that promoted growth in China’s renewable energy sector. At the same time, China discovered that it may have the largest shale gas reserves in the world. A Chinese shale gas boom, coupled with increased output from coal and imported oil, could marginalize wind and solar energy. Moreover, with Washington now looking to shale gas rather than wind and solar for new energy resources, prospects for increased US consumption of China’s green exports are diminished.

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Third, consumption patterns have eroded one of China’s most promising areas for low-carbon development: electric vehicles. A recent McKinsey & Co. report ranked China’s EV market a dismal fifth behind Japan, the United States, France and Germany. Even with generous subsidies for consumers and manufacturers, EV sales are sluggish, accounting for less than 0.02 percent of total vehicles sold (in the United States, it’s 0.09 percent). Demand is growing for gas-guzzling SUVs as well as luxury and medium-weight vehicles, especially foreign models, with imports of foreign-manufactured cars nearly doubling in 2010. The top-selling car in 2011 was the Buick Excelle, followed by the Volkswagen Lavida and the Chevrolet Cruze. China’s domestic vehicle manufacturers are drastically scaling back their small, fuel-efficient models and EV fleets and attempting to regroup around the new high-carbon model. In fact, China’s EV manufacturers are turning away from personal cars altogether and focusing on hybrid and electric city buses and taxi cabs. The major buyers of EVs are local governments and large state-owned corporations, not individuals.

China’s crisis in air quality is indeed a national one. This month dozens of other cities, from Shandong province in the east to Guizhou in the south-west, recorded pollution spikes. Experts attribute this to an exceptionally cold winter that has caused more burning of coal and other fuels than usual, to temperature inversions over some places, and to unfortunate wind patterns in others.

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Now officials must contend with the political impact of bad air. China’s government has long staked its legitimacy on being able to generate improved standards of living, and people have grown used to complaining about things they do not like. Adding chronically poisoned air to the mix could prove volatile, some think.

Dai Qing, a veteran environmental activist, says that the angry reaction to this month’s extreme pollution shows that the issue now overshadows other pressing problems such as corruption and infringements on people’s liberties. “For years, we environmentalists have been telling the authorities that GDP growth at any cost is a mistake,” she says.

But public-health scares and heavy smog in Beijing and others places—believe it or not, at times other cities have even darker skies than the capital—are leaving some people skeptical about whether things are really getting better simply because they can now buy things at a mall. Is life really improving, they ask each other in private conversations, in online forums, and at protest rallies, if doing ordinary things like drinking milk and playing outside can cause your child to get sick? How can we trust a government, they wonder, that tries to hide the truth about obvious dangers, by censoring reports of doctored food and drink and until very recently used the word fog to describe the noxious substance that made it hard to see even nearby skyscrapers?

In most places, a smog crisis is an environmental danger and, on some days, a public health emergency. In China, the grey skies overhead strike at the very legitimacy of the country’s ruling party. At its worst, Los Angeles never had anything that could compare to that.

Why, then, would the Chinese government allow such candor on the pollution question? Social media plays a role. Prominent Beijing real estate developer Pan Shiyi regularly tweets information about pollution to his several million followers on Sina’s Weibo, and the flurry of similar comments by more ordinary users has brought the pollution issue into the open. At a basic level, the government understands that once an issue hits critical mass, there’s little point in perpetuating the myth any further.

Also, unlike other issues which threaten the Chinese government’s hold on power, environmental concerns do not discriminate by class or income level. While many of Beijing’s citizens may not pay attention to esoteric political issues, the Communist Party surely believes that pollution has the potential to unite a large number of people against its governance. That, more than anything else, may explain why the government has approached this issue with unusual openness.

[…] According to one 2011 report, in 2010, “up to 40 percent of China’s rivers were seriously polluted” and “20 percent were so polluted their water quality was rated too toxic even to come into contact with.” Part of the explanation may rest in the “estimated 10,000 petrochemical plants along the Yangtze and 4000 along the Yellow rivers.” (And the Yellow and Yangtze are not even the most polluted of China’s seven major rivers.) On top of whatever polluted wastewater might be leaching or simply dumped into China’s rivers from these factories, the Ministry of Supervision reports that there are almost 1,700 water pollution accidents annually. The total cost in terms of human life: 60,000 premature deaths annually.

While the macro picture is concerning, even more worrying is that individual Chinese don’t know whether their water is safe to drink or not. A Chinese newspaper, the Southern Weekly, recently featured an interview with a married couple, both of whom are water experts in Beijing (available in English here). They stated that they hadn’t drunk from the tap in twenty years, and have watched the water quality deteriorate significantly over just the past few years, even while state officials claim that more than 80 percent of water leaving treatment facilities met government standards in 2011.

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In the 1950s, China, like other countries, neither understood well nor had the capacity to deal effectively with the environmental and health challenges its rapid development was creating. Today, however, China has both the knowledge and the capability. In the midst of the recent air pollution crisis, Premier-elect Li Keqiang said it would take time to address the air pollution problem: “There has been a long-term buildup to this problem, and the resolution will require a long-term process. But we must act.” In the meantime, the Chinese people can only wear their masks, buy their bottled water, and hope they are not in this year’s batch of pollution-related casualties.